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90 seconds at 9 am: China pumps in liquidity, growth sags a little, demographic changes grow; Japan uses planning to raise land prices; NZ$1 = US$0.826 TWI = 78.5
Here's my summary of the key news overnight in 90 seconds at 9 am, including news about China today.
China pumped funds into the financial system and expanded a lending facility to include smaller banks as rising cash demand before the Lunar New Year drove money-market rates up by the most in seven months, reaching 6.32%. Markets calmed after the move.
China’s economic growth slowed slightly in Q4 2013 as gains in factory output and investment spending eased last month. It was the slowest expansion for China in 14 years even though more than 10 million new jobs were created in 2013. However, the credit clampdown adds pressure on the outlook for 2014.
Also building as a challenge for China is demographic data out overnight that its total working age population dropped for the second straight year in 2013, shrinking by 2.4 million.
All these changes will probably prove very good for New Zealand exports of primary products. The rural-urban shift has a long way to go, and wages will be rising faster, indicating long-term growing demand for our products even if rivals also seek similar markets. Emphasising this is that even though economic growth was 7.7% in 2013, consumption grew at over 13%.
In Japan, they are being open about their desire to push up land prices. As part of their new goals to rekindle some economic growth, they are looking to inner city living expansion to do part of the job. They think the impact could be "extremely big".
Australia's falling exchange rate is moving as the RBA wants. But we are about to get a test of whether Aussie consumers are happy about it. Their inflation data for Q4 is due out tomorrow and it is expected to show prices that are rising faster than they are used to. It's unlikely to show any serious stress tomorrow, but the trend will likely build as their currency trends lower.
We get our own look at consumer price inflation later this morning with the data release by Statistics NZ.
US markets are closed today for a public holiday.
The NZ dollar starts today virtually unchanged at 82.6 USc, 93.9 AUc and the TWI is at 78.5.
If you want to catch up with all the changes on Monday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »